Structural Unemployment

AAA

DEFINITION of 'Structural Unemployment'

A longer-lasting form of unemployment caused by fundamental shifts in an economy. Structural unemployment occurs for a number of reasons – workers may lack the requisite job skills, or they may live far from regions where jobs are available but are unable to move there. Or they may simply be unwilling to work because existing wage levels are too low. So while jobs are available, there is a serious mismatch between what companies need and what workers can offer. Structural unemployment is exacerbated by extraneous factors such as technology, competition and government policy.

INVESTOPEDIA EXPLAINS 'Structural Unemployment'

Structural unemployment can often last for decades and may need radical change to redress the situation.

For example, hundreds of thousands of well-paying manufacturing jobs have been lost in the U.S. over the past three decades as production jobs have migrated to lower-cost jurisdictions in China and elsewhere.

The 2007-09 global recession also aggravated structural unemployment in the U.S. As the jobless rate peaked at over 10% and the average unemployment period for millions of workers rose significantly compared with previous recoveries, their skills deteriorated during this period of prolonged unemployment. The depressed housing market also affected the job prospects of the unemployed, since relocating to a new job in another city would mean selling their homes at a substantial loss, which not many were willing to do.  

Growing technology in all spheres of life may increase future structural unemployment, since workers without adequate skills will get marginalized, while even those with skills may face redundancy given the high rate of technological obsolescence.   
 

RELATED TERMS
  1. Concealed Unemployment

    When people who are out of work are not counted in official unemployment ...
  2. Lagging Indicator

    1. A measurable economic factor that changes after the economy ...
  3. Frictional Unemployment

    Unemployment that is always present in the economy, resulting ...
  4. Cyclical Unemployment

    A factor of overall unemployment that relates to the cyclical ...
  5. Phillips Curve

    An economic concept developed by A. W. Phillips stating that ...
  6. Natural Unemployment

    The lowest rate of unemployment that an economy can sustain over ...
Related Articles
  1. Economics

    Examining The Phillips Curve

    This model depicts an inverse relationship between unemployment and wage inflation, but is it accurate?
  2. Economics

    The Unemployment Rate: Get Real

    Depending on how it's measured, the unemployment rate is open to interpretation. Learn how to find the real rate.
  3. Economics

    What You Need To Know About The Employment Report

    This widely watched indicator of economic well-being directly influences the market.
  4. Professionals

    Introduction To The Continuing Claims Report

    This weekly economic release contains important information concerning unemployment levels and insurance.
  5. Economics

    Okun's Law: Economic Growth And Unemployment

    Learn about Okun's Law, why it is important and how it stood the test of time since first being published.
  6. Budgeting

    Are You Living Too Close To The Edge?

    If a missed paycheck will make your finances cave in, you must learn how to make proper supports.
  7. Fundamental Analysis

    The Misery Index: Measuring Your Misfortune

    The Misery Index measures a combination of unemployment and inflation, but what does it mean for your finances?
  8. Options & Futures

    Explaining The World Through Macroeconomic Analysis

    From unemployment and inflation to government policy, learn what macroeconomics measures and how it affects everyone.
  9. Professionals

    Jobless Growth: Are You Prepared?

    Economic growth doesn't always mean employment growth. Learn about how the jobless growth economy affects workers and investors.
  10. Economics

    Why is Keynesian economics sometimes called demand-side economics?

    Learn why Keynesian economics is sometimes called demand-side economics, and find out how government spending increases aggregate demand and encourages growth.

You May Also Like

Hot Definitions
  1. Treasury Bond - T-Bond

    A marketable, fixed-interest U.S. government debt security with a maturity of more than 10 years. Treasury bonds make interest ...
  2. Weight Of Ice, Snow Or Sleet Insurance

    Financial protection against damage caused to property by winter weather specifically, damage caused if a roof caves in because ...
  3. Weather Insurance

    A type of protection against a financial loss that may be incurred because of rain, snow, storms, wind, fog, undesirable ...
  4. Portfolio Turnover

    A measure of how frequently assets within a fund are bought and sold by the managers. Portfolio turnover is calculated by ...
  5. Commercial Paper

    An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories ...
  6. Federal Funds Rate

    The interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution ...
Trading Center